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How Behavioral Economists Can Help Increase Your Fundraising Success

What exactly makes your donors open their checkbooks to you? Do you know? Are you absolutely sure?

 

Every so often, it’s a good idea to revisit your nonprofit organization’s fundraising strategies. You may find that you may be able turbocharge your gifting programs by better understanding what makes your donors tick.

 

One good way to do this is to look at giving through the lens of behavioral economics. This relatively new field focuses on the psychology behind people’s financial decisions. If you can harness some of the research behavioral economists have done on charitable giving, you might be able to significantly increase your organization’s gifting totals—with very little additional work or expense.

 

The “Why” of Giving

It may be easy to assume that donors give money to nonprofits like yours because they’re altruistic. They selflessly want to help their communities. Actually, not so much, say economists like John List of the University of Chicago. He’s done many experiments and research about fundraising. He says that most donors give because they like the feeling—the “warm glow”—it gives them. Self-interest is involved.

 

What this means to you: Don’t forget to tell your donors what they get from making a gift to you. Will they get to continue enjoying a particular arts event they’ve come to love?

Is there a service (like public television) that could be discontinued if you don’t hit your fundraising goal?

 

Donors, like investors, also tend to “follow the herd.” If your benefactors see that their neighbors, colleagues or other influential people in their circles donate to you, they’re more likely to do the same. People feel comfortable joining in on something others are already supporting. So whenever possible, leverage that. Have your board members or other influencers personally pitch donors. Get a notable community member to endorse your organization if possible.

 

A few more fundraising strategies from the behavioral economists:

 

Donors like lotteries. It sounds basic, but contests really work. Donors love the chance to win a prize, and will often increase their giving to get one—whether it’s an embossed coffee mug or a chance to have lunch with a local sports celebrity.

 

Matching gifts work. Interestingly, you don’t have to be as generous as you might think. Getting a partnering organization or donor to match gifts to your nonprofit on a three-to-one basis actually doesn’t encourage any more giving than a one-to-one match. On the other hand, if you offer less than a one-to-one match (like 75 cents for every dollar), you can actually hurt your giving levels.

 

Give donors some control. Let benefactors tell you how and how often they’d like to be contacted by you. Are phone calls OK? Do they want your monthly newsletter? Or would they rather you just send them your annual appeal letter? Don’t worry: Contacting donors less often—at their request—can actually increase the amount of their gifts. They appreciate being able to call some of the shots.

 

Source for information in this article:  www.freakonomics.com – October 10, 2013, “How to Raise Money without Killing a Kitten:  A New Freakonomics Podcast”

 

 

 

Disclosure Information

 

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This article is not a substitute for personalized advice from RegentAtlantic.  This information is current only as of the date on which it was sent.  The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic.  Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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